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Gokul Chandra Dey and Sons Vs. Joint Secretary, Government of India and ors. - Court Judgment

LegalCrystal Citation
SubjectCriminal
CourtKolkata High Court
Decided On
Judge
Reported in1981CriLJ401
AppellantGokul Chandra Dey and Sons
RespondentJoint Secretary, Government of India and ors.
Cases Referred(Joe Pereira v. Union of India).
Excerpt:
- .....price therefor as hereinafter provided:(a) where the price can consistently with the controlled price fixed under clause (4) be agreed upon, the agreed price;(b) where no such agreement can be reached, the price calculated with reference to such controlled price.clause (4) is as follows:(4). controlled price- for the purpose of clause 3 the controlled price of sugar shall be rupees two hundred and eighty only per quintal.it is important to remember that the order applies to the stock held by the dealer only on 17th dec, 1979. the other clauses are not necessary for my present purpose.3. in order to appreciate the circumstances under which this order came to be passed, it is necessary to refer to certain facts. on the 16th august, 1978 control on price, sale and distribution of sugar.....
Judgment:
ORDER

Sabyasachi Mukharji, J.

1. This is an application by one Gokul Chandra Dey & Sons a partnership firm which carries on business dealing in sugar. The petitioner has a licence for the purpose under the relevant provisions of law. The petitioner states that the petitioner buys sugar from various large sugar dealers of West Bengal on principal to principal basis. The sugar so purchased was then sold by the petitioner in wholesale to the various small dealers. The petitioner challenges in this application, under Article 226 of the Constitution, mainly the order dated 17th December, 1979 being Annexure D to the petition, which is an order called Sugar (Retention and Sale by Recognised Dealers) Order, 1979. As this is the subject matter of main challenge, it is material to set out the relevant portion of the said order. But before I do so, it will be necessary to refer to certain provisions of the Essential Commodities Act, 1955. Under Section 3 of the said Act, the Central Government has the power to control production, supply, and distribution of essential commodities. Incidentally, it may be mentioned that there is no dispute, in the instant case, that sugar is an essential commodity. Sub-section (1) of Section 3 of the Essential Commodities Act, 1955 enjoins that if the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, or for securing any essential commodity for the defence of India or the efficient conduct of military operations, the Central Government may provide by an order for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. Sub-section (2) of Section 3 of the said Act enjoins that without prejudice to the generality of the powers conferred by Sub-section (1), by an order certain other powers can be provided. Clause (c) of Sub-section (2) of Section 3 empowers the Central Government to control the price at which any essential commodity may be bought or sold. Clause (f) of this Sub-section also empowers the Government by an order to require any person holding any stock or engaged in production or in the business of buying or selling of any essential commodity to sell the whole or a specified part of the quantity held in stock or produced or received by him or in the case of any such commodity which is likely to be produced or received by him to sell the whole or a specified part of such commodity when produced or received by him to the Central Government or a State Government or to on officer or agent of such Government or to a Corporation owned or controlled by such Government or to such person or class of persons and in such circumstances as may be specified in the order. It is not necessary for me to refer to the Explanations and other clauses of Sub-section (2) of Section 3 of the said Act. But it would be relevant to refer to Sub-section (3) of Section 3 of the said Act which is in the following terms:

(3) Where any person sells any essential commodity in compliance with an order made with reference to Clause (f) of Sub-section (2), there shall be paid to him the price therefor as hereinafter provided:

(a) where the price can, consistently with the controlled price, if any, fixed under this section, be agreed upon, the agreed price;

(b) where no such agreement can be reached, the price calculated with reference to the controlled price, if any;

(c) where neither Clause (a) nor Clause (b) applies, the price calculated at the market rate prevailing in the locality at the date of sale.

My attention was drawn to Sub-sections (3A), (3B) and (3C) as well as to Sub-section (6A) of Section 3 in order to emphasis the contradistinction to the provisions of Sub-section (3) of Section 3 of the present Act.

2. The challenge in this case, as I have mentioned before, is to the order dated 17th Dec, 1979 which was issued in exercise of the powers conferred by Section 3 of the Essential Commodities Act, 1955. The Clause (3) of the said order provides as follows:

3. Retention of stocks of sugar-

(1) Every recognised dealer shall retain sixty-five per cent of the stock of sugar held by him at the close of business on the date of commencement of this order for the purpose of sale to the State Government, or to an officer or agent of such Government or to a corporation owned or controlled by such Government, or to such other person or class of persons as may be specified by the State Government, under the provisions of this order and subject to such terms and conditions as may be specified by the State Government,

Explanation; For the purpose of this sub-clause, sugar delivered or despatched to a recognised dealer by a producer of sugar or any other recognised dealer prior to the commencement of this order but which is received by such recognised dealer at any time after such commencement shall be deemed to be sugar held by the recognised dealer on the commencement of this order.

(2) Where sugar has been retained under Sub-clause (i) by a recognised dealer, he shall immediately thereafter intimate the quantity of sugar so retained by him to the State Government.

(3) Where a recognised dealer sells sugar under the provisions of this order, there shall be paid to him the price therefor as hereinafter provided:

(a) where the price can consistently with the controlled price fixed under Clause (4) be agreed upon, the agreed price;

(b) where no such agreement can be reached, the price calculated with reference to such controlled price.

Clause (4) is as follows:

(4). Controlled price- For the purpose of Clause 3 the controlled price of sugar shall be rupees two hundred and eighty only per quintal.

It is important to remember that the order applies to the stock held by the dealer only on 17th Dec, 1979. The other clauses are not necessary for my present purpose.

3. In order to appreciate the circumstances under which this order came to be passed, it is necessary to refer to certain facts. On the 16th August, 1978 control on price, sale and distribution of sugar was lifted. On the 6th June, 1979 monthly release system was reintroduced by the Government to prevent steep fall in sugar prices in order to protect the sugar growers or cane growers. On the 12th Sept, 1979 Sugar (Price Control) Order, 1979 was made under Section 3 of the Essential Commodities Act, 1955. The said order fixed the maximum ex-factory price at which sugar could be sold or agreed to be sold by producers and the maximum retail price at which it could be sold in retail. The ex-factory price for mills situate in U, P. was fixed at Rs. 268 per quintal, and the retail price in West Bengal was fixed at Rs. 300 per quintal. On the 20th Sept., 1979 the Sugar (Price Control) Amendment Order, 1979 was made clarifying that the ex-factory price fixed in the order dated 12th Sept., 1979 would include the additional duty of excise also. On the 30th Nov., 1979 the Sugar (Price Control) Amendment Order, 1979 was made. The ex-factory price and the retail price fixed in the order dated 12th Sept., 1979 were increased. For Uttar Pradesh Mills the new ex-factory price was fixed at Rs. 298 per quintal and the retail price in West Bengal was fixed at Rs. 335 per quintal. The excise duty on sugar was also increased by Rs. 30 per quintal and the increased price was to offset extra imposition of excise duty. On the 17th Dec, 1979 two orders were passed, one order was rescinding the Sugar (Price Control) Order, 1979 that is to say, fixing the price of sugar, as I have indicated hereinbefore. On the same date, Sugar (Retention and Sale by Recognised Dealers) Order, 1979 was made the relevant portion of which I have set out hereinbefore. On that very date, there was another order passed viz. The Levy Sugar Supply (Control) Order, 1979 made whereby producers were directed to supply the levy sugar. On the same date another order viz. Sugar (Price Determination for 1978-79 Production) Order, 1979 was made determining the price of levy sugar for sugar produced in 1978-79. On that very date the Sugar (Price Determination for 1979-80 Production) Order, 1979 was made fixing the price of sugar for 1979-80. Learned Advocate for the Union of India drew my attention to the Press Note issued by the Government of India on the 17th Dec, 1979 explaining the dual pricing mechanism for sugar. He also drew my attention to the Levy Sugar (Supply & Control) Order, 1979 in order to impress upon me the background of the circumstances in which the impugned order came to be passed, that is to say, in order to ensure supply of sugar to the consumers at reasonable prices and at the same time to ensure reasonable return of prices to the cane growers of their production,

4. In this petition, various points had been taken as to the validity of the impugned order, viz. the prices fixed being arbitrary in violation of the fundamental rights, as gauaranteed under Article 19 and other articles of the Constitution. But these points were not pressed before me. I may incidentally mention that all these petitioners moved applications under Article 226 of the Constitution challening the said order on the 15th Jan. and rule nisi had been issued. Interim orders were also passed in terms of prayers (f) and (g) of the petition, which, inter alia, restrained the respondent Government from giving any effect to the order dated 17th Dec, 1979 and also preventing them from further implementation of the order dated 17th Dec, 1979 and those orders were passed for 8 weeks. After that the applications came up, on several occasions for hearing and on the 19th Feb., 1980 I varied the interim orders, subject to certain conditions. It is not necessary for me to refer to the conditions that I imposed upon the Government to lift sugar which had been seized. I am informed that no sugar subsequent to that order had been lifted pursuant to the order or taken delivery of by the Government to make these available to the consumers. On the 19th Feb., 1980 learned Advocate for the petitioner submitted that 'no price could be fixed with reference to the particular transaction only for which the direction was made to sell the stock in exercise of the powers under Section 3(2)(f) of the Essential Commodities Act, 1955. The control price referred to in Sub-section (3) of Section 3 of the Act is a price which has to be fixed with reference to Sub-clause (c) of Sub-section (2) of Section 3 of the Act. The control price cannot be fixed with regard to any specified transaction as such and on this ground the impugned order dated 17th Dec, 1978 is bad'. This contention, I have set out hereinbefore, was recorded in the order dated 19th Feb., 1980 because this point had not been specifically taken initially in the petition but had been taken during the course of argument. On that the learned Advocates for the petitioner wanted leave to file applications for amendments and thereupon I suggested that he should formulate his point and the above point was formulated by the learned Advocate for the petitioner as I have set out before. Learned Advocates for the respondents, however, did not object to this point being argued by the petitioner even though this point had not been specifically taken by the petitioners in their petitions and that fact is recorded in the order dated 19th Feb., 1980. Then on the 10th March, 1980 the case was adjourned on the prayer of the Union of India that they had not been able to obtain instructions. On the 24th March, 1980 the matter was again adjourned at the instance of the State of West Bengal. It is not necessary for me to set out in extenso the other Sugar (Price Control) Order, 1978 and other control orders which I have already referred to hereinbefore. Incidentally, it may be mentioned that in spite of these control orders certain orders were passed in certain other proceedings in the case of Pratappur Sugar Industries Ltd. and another in the case of Bharat Sugar Mills Ltd. as also in the case of Malwa Sugar Mills Co. Ltd. by Justice Mrs. Nag and Mr. Justice Amiya Kr. Mukherjee respectively. Those orders were subject to certain conditions and from time to time those were modified by me. It is not necessary for me to refer to those orders and the provisions of the said Act in detail except that there was immediate need for certain actions in order to ensure supply of sugar to the consumers and to ensure reasonable prices to the cane growers.

5. The only point that was canvassed before me and the only point with which I am really concerned, is, whether the Government can fix the price at which the recognised dealer could be directed to sell the Government the retained stock. Before considering this, one has to bear in mind that this order refers to 65% of the stock of sugar held by a dealer at the close of the business on the date on the 17th Dec, 1979. Another point which has to be borne in mind is that this order is only concerned with the stock of the dealer on that particular date. So, these orders cover only the stocks held by the recognised dealers on that date and on that date alone. Clause 3 as I have indicated before, enjoins that 65 per cent of the stock had to be retained for a particular period and when the recognised dealers sell sugar under the provisions of the Impugned order then he should be paid the price as mentioned in Sub-clause (3) of Clause 3 of the order and the control price, as indicated by Clause (4) of the said order is Rs. 280 per quintal. As I have mentioned before, apart from the argument Whether this price is inequitable or violative of the rights of the petitioners, being arbitrary without taking into consideration the price that a dealer was obliged to pay while buying sugar from cane growers and other factors which might be offset, because it was urged that this order only dealt with 65 per cent of the stock held by the dealers and did not cover 35 per cent on which he could make up his deficiency or his margin, I am really concerned in this application with the power of the Government to fix the price for a particular transaction. It has to be borne in mind that by the order dated 17th Dec, 1979 the control price of sugar was lifted as such, that is to say, the price at which sugar could be sold and purchased in terms of Clause (c) of Sub-section (2) of Section 3 of the Essential Commodities Act, 1955. Therefore, for general transactions of buying and selling of sugar on that date, there was no control price, as contemplated under Clause (c) of Sub-section (2) of Section 3 of the Act. Now, in such a situation what is to be done. Sub-section (3) of Section 3 according to the petitioner, enjoins that neither Clause (a) nor Clause (b) of Section 3(3) applies and the price has to be calculated at the market rate prevailing in the locality as to be paid for the sale under Clause (c) of Section 3(3) of the Act. Now, the question is, by Clause 4 of the impugned order can the control price be fixed for a particular transaction which is being covered by the exercise of the power under Sub-section (3) of Section 3 of the Essential Commodities Act, 1955?

6. This aspect of the problem has been considered, though not precisely in the same context, in some of the decisions by the Supreme Court to which my attention was drawn. Reference in this connection may first be made to the observations of the Supreme Court in the case of Pani-pat Co-operative Sugar Mills v. Union of India : [1973]2SCR860 where the Supreme Court dealt with the scope of Section 3(3C) of the Essential Commodities Act, 1955. In order to appreciate the judgment, it may not be inappropriate to set out the provisions of Sub-section (3C) of Section 3 of the said Act which reads as follows to which I have already referred:

(3C). Where any producer is required by an order made with reference to Clause (f) of Sub-section (2) to sell any kind of sugar (whether to the Central Government or a State Government or to an officer or agent of such Government or to any other person or class of persons) and either no notification in respect of such sugar has been issued under Sub-section (3A) or any such notification, having been issued, has ceased to remain in force by efflux of time, then, notwithstanding anything contained in Sub-section (3), there shall be paid to that producer an amount therefor which shall be calculated with reference to such price of sugar as the Central Government may, by order, determine, having regard to:

(a) the minimum price, if any, fixed for sugarcane by the Central Government under this section;

(b) the manufacturing cost of sugar;

(c) the duty or tax, if any, paid or payable thereon; and

(d) the securing of reasonable return on the capital employed in the business of manufacturing sugar, and different prices may be determined from time to time for different areas or for different factories or for different kinds of sugar.

There, the Supreme Court observed that the fair price of sugar had to be determined in respect of the entire produce in the year of the industry and the reasonable return on the capital employed in the business of manufacturing sugar. But the Government could not fix any arbitrary price or fix by any extraneous consideration or such that it did not secure a reasonable return on the capital employed in the industry. At paras 6, 7 & 8 of the judgment, the Supreme Court has set out the relevant history and the background of the Tariff Commissions and Sugar Enquiry Commission and it is not necessary for me to refer to these in detail. The Supreme Court there has also dealt with the criterion of fixing the ex-factory price with which I am really not concerned in this case, though they have analysed the provisions of Section 3 of the Essential Commodities Act and the effect of Clause (f) of Sub-section (2) of Section 3. There, the Supreme Court has also observed that by Sub-sections (3A) and (3B), the question of market price could not arise where there was no control on fixed price or price agreed consistently with reference to the control price. The Supreme Court also dealt with Section 3, as I have already indicated before, and emphasised that the amount payable to the producers and the price determined by the Government were distinct and this should not be confused. I must emphasise that the case was really concerned with the manufacturers' rates and the fixation of their price. The other decision to which my attention was drawn is the decision of the Supreme Court in the case of Shree Meenakshi Mills Ltd. v. Union of India : [1974]2SCR398 . There, the Supreme Court at page 374 of the report emphasised the scope of Sub-section (3) of Section 3 of the Essential Commodities Act and observed as follows:

Section 3(3) of the 1955 Act provides that where any person sells essential commodity in compliance with an order made with reference to Clause (f) of Sub-section (2) there shall be paid to him, (a) price agreed, if it is consistent with the controlled price, (b) price calculated with reference to the controlled price, if no agreement could be reached, (c) the price calculated at the market rate prevailing in the locality on the date of sale, if neither Clause (a) nor Clause (b) applies'. Again, the Court referred to the decision, which I have already mentioned hereinbefore, and at pp. 373 and 374 analysed the different provisions of the said Act. At page 382 of the report, the Supreme Court categorically observed that the control price fixed under Section 3(1) read with Section 3(2)(c) was different from the price as contemplated under Sub-sections (3A), (3B) and (3C).

7. The last mentioned decision was given in the context of control of cotton textiles. In the case of Prag Ice & Oil Mills v. Union of India, reported in : 1978CriLJ1281a , the Supreme Court had to deal with this aspect and observed that unless there was arbitrariness the mechanics of price fixation could not be closely scrutinised by the Courts and an order fixing a price should not be normally investigated as to whether it ensured an equitable return to the parties concerned. That was a case mainly dealing with the question, whether the price fixed was unreasonable in the context of mustard oil and there the Supreme Court has discussed the mechanics of price/costing in paras 50 to 58 of the judgment. I am not really concerned with the said controversy. Reliance was also placed on the observations of the Supreme Court by learned Advocate General on the decision in the case of Narendra Kumar v. Union of India reported in : [1960]2SCR375 on the nature of power under Section 3 of the Essential Commodities Act. So far as the amplitude of the nature of the power of Section 3 of the Essential Commodities Act is concerned in my opinion, there cannot be any dispute. But the case, in my opinion, which deals with the question with which I am concerned and which is apposite to the present controversy, is the decision of the Division Bench of the Allahabad High Court in the case of Sitaram Jwala Prasad v. State of Uttar Pradesh reported in : AIR1975All272 which while dealing with U.P. Coarse Foodgrains (Levy) Order analysed the provisions of Section 3-B of the Essential Commodities Act, 1955. In the said decision after discussing the relevant provisions of Sections 3 and 3-B of the said Act, the Allahabad High Court was of the opinion that the controlled price could not be in respect of a particular transaction contemplated under Section 3 of the Act. The Allahabad High Court observed that under Section 3-B the State Government was bound to pay to the dealers either the controlled price as contemplated by Clause (i) of Section 3-B or the price prevailing or likely to prevail in the post-harvest period in the area as contemplated by Clause (ii) of Section 3-B. The contention that price mentioned in Sch. I of the Order viz. Rs. 74 per quintal is the controlled price like the instant case before me was without substance. Clause (i) of Section 3-B spoke of controlled price, if any, for the grade or variety of foodgrains and not in regard to a particular transaction of sale of such foodgrains. The controlled price contemplated by Clause (i) therefore, had to be with reference to either the grade of foodgrain or its variety. If the Government issued a direction as it did in the case before the Allahabad High Court as to the sale of 50% of the foodgrains at a price contemplated by the clause of the said order, it could not be said to be a price fixed in accordance with Section 3-B. The Division Bench further observed that it could not be said that whatever price the Govt. chose to mention in the order as price payable in respect of the stock requisitioned by it would automatically become the controlled price of the grade or variety of the concerned foodgrains. The same principle was reiterated by the Karnataka High Court in the case reported in : AIR1979Kant12 (Joe Pereira v. Union of India).

8. Learned Advocate-General argued before me that the amplitude of the power under Clause (c) of Sub-section (2) of Section 3 gave the Government power for controlling the price at which any essential commodity may be bought or sold. Therefore, according to him, if any retention order was made under Clause (f) of Sub-section (2) then the price to be paid for the sale of retained quantity could be the price mentioned in the said order. But Sub-section (3) of Section 3 of the Essential Commodities Act enjoins that where any person sells any essential commodity in compliance with an order made with reference to Clause (f) of Sub-section (2) because it requires any person holding any stock, as the petitioner in this case, is directed to hold the stock, 'there shall be paid to him the price as indicated therein', and that price is mentioned with reference to the controlled price where there is controlled price or agreed price where there is agreed price and where there is none, the market price prevailing in the locality at the date of the sale. In case of user of power under Clause (f) of Sub-section (2) of Section 3, Sub-section (3) of Section 3 is automatically attracted and if that is attracted then it must be with reference to the controlled price in general. If it was intended that it could be specified in the order itself, then, the reference to 'controlled price' would be wholly redundant and it could have been provided that where a person holding a stock of essential commodities in compliance with the order made under Clause (f) is directed to sell he should be obliged to sell at a price indicated in the order but that has not been done. If that is the position, the well known rule of construction is that redundancy in a statute should be avoided would be attracted. Furthermore, if the expression 'controlled price' is meant to cover the price fixed for a particular transaction in which the dealer is obliged to sell a particular retained quantity then that expression used in Sub-sections (3-B) and (3-C) of Sub-section (3) would become difficult of reconciliation.

9. In the aforesaid view of the matter, I am of the opinion that there cannot be a controlled price of sale for a particular transaction by a retained dealer in respect of the particular transaction. If any price had been fixed in respect of all transactions for buying and selling of sugar on that particular date, the order might have been valid but any order for selling to the Government or handing over to the Government or any agent as declared under the Act of a particular stock at a particular price cannot in the context of the Essential Commodities Act, 1955 be described as and/or treated as 'controlled price' as such. If that is so, then Clause (c) of Sub-section (3) of Section 3 is attracted. Therefore, the fixation of the price by Clause (4) of the impugned order is bad and if that clause goes then other provisions cannot be given effect to, that is to say, there cannot be any obligation to hand over the retained stock at a particular price fixed on that date by the impugned order. I am not concerned whether in respect of other 35 per cent the dealer could have made profit or not because, in my opinion, that would mean embarking on a question of construction which is not necessary or germane for me to embark on.

10. In the premises the order dated 17th Dec. 1979 being Annexure 'D' to the petition is quashed and the rule nisi is made absolute to that extent.

11. There will be no order as to costs.

12. Stay asked for on behalf of the Union of India is granted. Existing interim order as modified already granted will continue for a period of four weeks.


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